For people that are deep into debt, foreclosure is a very real danger. Since homeowners are not able to pay back their loans, the lenders can take away their house as collateral. Bankruptcy might appear like the best way to avoid a foreclosure, but does chapter 13 stop foreclosure?

The short answer is: yes, it can. Chapter 13 bankruptcy provides a means for people in debt to pay off their debts, and keep their homes. Keep reading this brief article and I’ll demonstrate how you are able to prevent foreclosure and save your home.

Chapter 13 is referred to as a “wage earner’s plan.” This is because it allows people to pay off what they owe. This is done by a repayment plan. Debts might be reduced so that they can return on their feet. After they do, they are still expected to pay off their debts. If you’re going through foreclosure, chapter 13 halts foreclosure. Unlike the other chapters, 13 specifically provides protection to people in debt.

To be qualified for Chapter 13, the first step is to submit a petition. Typically, once you’ve filed a petition, you get an automatic stay. This is protection against foreclosure, and allows you to keep your home while your petition is being reviewed. Once this is in place, it allows the person filing for bankruptcy to have some room to work with.

In two weeks of filing for Chapter 13 bankruptcy, a plan must be made. This plan will indicate how the person would be able to pay back debts, and what needs to be completed to make this possible. If the person’s income is lower that what the debts are, the debts could be reduced. The general objective of chapter 13 is to prevent foreclosure, and allow the person to pay back debts. If you’re in debt and feel concerned about losing your home, chapter 13 is a good way to acquire some short-term relief from the situation.

Filing for Chapter 13 bankruptcy can be a nerve-racking and frustrating procedure however. I strongly recommend that you take advantage of bankruptcy services, because they carry out all the paperwork on your behalf. Most bankruptcy services offer free evaluations, so you may determine if bankruptcy is right for you.

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